Posted by Teresa on July 17, 2012 under Fair Housing Act, Landlord and Tenant FAQs, Tenant Screening & Background Checks | 
No matter if you’re a long-time landlord or new to the business, you’ll likely encounter a wide mix of tenants. Some will be easier to deal with than others. They pay their rent on time, follow your rules and cause no problems. Other tenants can only be described as problem tenants. Most landlords would probably agree that if they could turn back the clock, they would not have agreed to lease to these tenants in the first place.
Trouble is, you can’t always know if a tenant will be a problem. Experienced landlords know that even those with good jobs, good credit scores and sparkling references can later turn out to be duds—or worse. But there are warning signs that every landlord should know.
Five Warning Signs of Problem Tenants
- They gripe about the application fee. Good tenants realize that running background checks and tenant credit checks, calling references and processing paperwork take time and money. They pay the application fee without complaint. A lease applicant who can’t pay the fee, or complains about it, is a red flag.
- They ask for more time to pay the first month’s rent and security deposit. Sure, it can be tough to come up with that much money at once. But remember, you’re running a business, not a charity. If a tenant cannot pay all of the rent and security deposit up front, you may want to pass on him or her and wait for someone who can. It’s a matter of choice. Let another landlord deal with it.
- They are new at their job. This isn’t always a bad thing. Plenty of people switch jobs because they’re offered better positions that pay more, and they can afford more rent. But if a prospective tenant has had several jobs in the past two or three years, the new job might not last for long. And soon, the excuses for paying rent late will begin.
- They mention relationship problems. Keep in mind that according to the Fair Housing Act, landlords may not discriminate against applicants based on marital status. It’s illegal to refuse to rent to a divorced person, a single person or a married person because of their status alone. But if an applicant mentions boyfriend or girlfriend problems, or that he or she is trying to get away from someone, consider these red flags. Trouble typically follows people around. If you don’t want an upset estranged husband or troubled ex-girlfriend on your hands, pass on this tenant.
- They ask too many questions. There’s a fine line between having a healthy interest in your rental property and showing warning signs of being a problem tenant. Be on alert if a prospective tenant asks about things like:
- The racial makeup of your building or the neighborhood.
- Exactly what the electric, sewer or gas bills will be.
- How to file complaints or repair requests.
- Where they can smoke (if you have a non-smoking property).
- How often you’ll be inspecting the property, and how much warning you’ll be giving.
- The type of questions, the number of them, or the way they are asked can tell you a great deal about the person who’s applying to live in your property.
As a landlord, you get to decide with whom you enter into a lease agreement. Keep your eyes and ears open, trust your gut instinct and always verify everything a prospective tenant tells you.
No matter how competitive your rents are, you need to protect your rental property and assets with tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
Posted by Teresa on July 13, 2012 under Landlord and Tenant FAQs |
Not everyone is destined to be a landlord. It’s a tough profession, and it takes a tough person to do it successfully.
If you agree with the statements below, you might not be cut out for owning and leasing rental property.
- It’s okay to rent out a property without requiring tenants to complete an application.
- I don’t have a problem with tenants allowing their friends and family members move in without my knowledge or permission.
- Background screening and tenant credit checks aren’t that important. I go by gut instinct.
- If a tenant has trouble paying rent, I’ll take some of it out of the security deposit.
- A handshake is better than a written lease.
- I always give tenants a grace period to pay the rent.
- If there are three roommates in a property, I’ll accept three rent checks.
- I’d feel bad telling someone they needed to leave my rental property.
- If I don’t like how someone looks, I won’t rent to him or her.
- I’ll go out of my way to make things work with a tenant.
- Even a bad tenant is better than a vacant rental.
- I’m not familiar with the housing codes or rental laws in my state.
These are just a few ways to get in trouble, lose money or fail at being a landlord. What can you experienced landlords out there add to the list?
Posted by Teresa on May 15, 2012 under Landlord and Tenant FAQs, Rents and Deposits |
As we reported back in March, some landlords and management companies are forcing tenants to pay rent through online services. Many question whether this is legal or not. The suit filed by the residents of Woodlake Manor Apartments is still moving through the court system, so it’s too soon to tell how that will shake out. But in the meantime, how can you convince tenants to switch over to online rent payment? And is it worth it?
Having rent payments flow automatically into your bank account can be convenient. Collecting checks, posting them in your accounting software, depositing them in the bank (or having your bookkeeper do it) takes time you could be spending on growing your business—or better yet, doing something fun.
Plenty of landlords receive rent payments through a variety of online tools—and neither they nor their tenants would go back to paper checks for anything. It seems most people you know do all their banking and bill paying online. So why not convert your tenants over to online rent payment?
Maybe your tenants won’t or can’t use online services. Perhaps they don’ t all have computers at home. Or they won’t take the time to learn how to use online services. If you are ready to be done with paper checks, maybe it’s time to help them move into the 21st century.
Try incentivizing tenants to transition to online rent payment with these step-by-step ideas:
- Send out a notice to all tenants that you are now offering online rental payment.
- List the benefits, such as avoiding writing and mailing a check, finding a stamp and sending the rent several days in advance of the due date. Online payments are more convenient: rent can be sent electronically on the due date. Tenants can schedule payments ahead of time to cover travel or vacations. Checks can’t get lost in the mail. And, it saves paper!
- Offer a one-time $10 or $25 gift card for tenants who sign up right away for online rent payment.
- You will be notified which tenants choose the online option.
- For those who choose not to use online payment, inform them that beginning with their next lease renewal, you will be requiring them to do so.
- If they still balk, give them the option of paying the entire new rent at renewal (whatever amount you would normally raise the rent) or a lowered amount for paying online.
Landlords may not be able to force all tenants to pay rent online. There will likely be situations where a tenant can’t get to a public library to use a computer, or is not able to understand how to use online banking. And tenants with disabilities are protected under law. Be reasonable and flexible, and collect rent online to the extent that you can.
Protect your rental property and assets through tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
Posted by Teresa on September 8, 2011 under Landlord and Tenant FAQs |
Every now and then, landlords are faced with unusual requests from their tenants. One we’ve heard of recently involved a tenant asking for a discount on rent in exchange for paying a full years’ worth up front.
The rent is $650 per month, and the tenant offered a full payment of $7,200 or $600 per month. The landlord wanted to know if it was a good idea to accept the tenant’s money and move on, knowing she didn’t have to worry about late rent for a full 12 months.
While it might seem like a no-brainer to eliminate one concern that comes with being a landlord, this might not be such a smart way to go. Here’s why:
- Even if the landlord put the entire amount into the bank, interest rates are hardly attractive right now. Other investments might garner more return—or not. Is the risk worth it? There are few incentives for the landlord to give up $600 in rent.
- Offering a tenant a discount doesn’t make sense when you consider the lease stipulates rent is $7,800 per year, to be paid monthly at the rate of $650 per month. Monthly payments are all a landlord needs to do to make rent easier to pay.
- Entering into negotiations such as this with tenants could lead to others seeking discounts for paying two, three or six months in advance. This could lead to a bookkeeping nightmare for the landlord. And anyone who thinks tenants won’t find out about such an arrangement should think again. Tenants talk!
- If the tenant breaks the lease, or the landlord needs to evict, holding the tenant’s money for future rent could complicate matters.
In the end, a $50 discount is far more generous than any bank would give the landlord—so why give it to the tenant?
Posted by Teresa on August 18, 2011 under Landlord and Tenant FAQs |
Q: Can a landlord prevent a tenant from breaking a lease with 60 days’ notice, due to trauma from a violent crime that occurred in the rental unit?
A: In some cases, and in some jurisdictions, the law would allow a lease to be broken without penalty. Usually, a tenant who signs a one-year lease cannot terminate it mid-term, even with a 60-day notice. In general, a landlord is not liable for unforeseen criminal acts of a third party against his or her tenants. If the tenant had reported issues regarding safety, such as inoperable door or window locks, or insufficient lighting, the tenant may have recourse, as the landlord could be considered in breach of the lease for failing to protect the tenants.
In a case like this, landlords could find themselves between a rock and a hard place, wanting to avoid any admission of liability by allowing a tenant out of a lease, while understanding why they would want to move.
Q: If I see that a tenant is demonstrating some hoarding tendencies, should I intervene?
A: Landlords have the right to expect a tenant will keep the rental property in good, clean and safe condition. Hoarding can be a safety hazard, particularly if flammable materials are kept in large quantities or emergency crews would have a difficult time navigating through the unit. Tenants who keep debris, garbage, empty boxes and cans, and stacks of newspapers in a rental unit are endangering themselves and other tenants.
Don’t ignore this situation. Keep the lines of communication open and respectfully and gently talk to the tenant about the situation. You may need to try contacting a family member (perhaps from the emergency contact listed on the lease application).
Q: My tenant damaged a wall and hardwood floor by carelessly leaving a window open during a rainstorm. I took the repair money out of their security deposit, and they replenished it. Now I want to terminate the lease to prevent this from happening again. Do I have that right?
A: Carelessness is not gross negligence. If the tenant is on a month-to-month lease, then you may terminate with notice, with no reason given. But if it’s a longer lease, this situation probably will not qualify as an allowable reason.
Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining legal advice applicable to your situation.
Posted by Teresa on July 19, 2011 under Landlord and Tenant FAQs, Screening and Background Checks |
Landlords approach apartment or rental house rehabs differently. Some think that no matter what they do, tenants will damage their rental property, so there is no reason to upgrade or make it look nice.
Other landlords invest in major improvements to their properties in order to charge higher rents and attract higher-income tenants. Still others make small improvements each time a tenant moves out, to slowly but surely increase the appeal and attract the best tenants.
There is no right or wrong approach – just the one that works for you. Here are some pros and cons to each approach:
Leave Your Rental Property as Is and Make No Improvements
Pros:
- You save money.
- You can turn over the rental to a new tenant more quickly.
- You avoid the possible frustration of seeing improvements damaged or ruined by tenants.
Cons:
- You probably won’t be able to increase rents unless vacancy rates decline.
- You could easily find your rental property losing value.
- You may attract only tenants who are okay with living in less-than-attractive housing.
Invest in a Major Rental Rehab
Pros:
- The result is usually worth the effort.
- You can often charge a premium rent to increase your return on investment.
- You can attract more desirable tenants.
- The value of your rental property may increase.
Cons:
- Remodeling can be very expensive.
- There is no guarantee your work will be valued or respected by tenants.
- Your rental property value may not increase, due to current market conditions.
Make a Few Improvements Each Time a Tenant Moves Out
Pros:
- Your investment is spread out over time.
- You may increase the value of your rental property.
- You can gradually improve the quality of tenants your attract.
Cons:
- It can take much longer to see real improvements.
- You may not keep up with the market at a slower pace.
- There is risk in subjecting your property to less desirable tenants for a longer period of time.
Remember, attracting desirable tenants is a worthy goal, but it’s not for every landlord. If you’re fine with minimum investment in your rental property, just beware of starting down the slippery slope to slumlord status!
No matter how nice your rental property is, you can’t be sure that tenants are going to keep it that way. Minimize your risk by conducting tenant credit screening and tenant criminal background checks.
Posted by Teresa on May 10, 2011 under Landlord and Tenant FAQs |
Ken is a long-time landlord who, in his own words, is getting tired of constant requests from tenants for maintenance and repairs in his rental units. Ken’s 6-unit building is beginning to show signs of age, and he’d love to make each tenant responsible to repair or replace their apartment’s appliances and heating system when they stop working properly. In fact, he’s thinking about adding this clause to his lease agreement.
Is this a good idea?
Experts don’t recommend landlords allows tenants to perform upkeep, preventive maintenance or repairs for a number of reasons:
- A tenant’s level of competence with repairs and maintenance is a complete unknown.
- Tenants may not repair appliances to an acceptable level—especially since they don’t own them.
- The liability of having a tenant work on electrical equipment is just too great. If they harm themselves or others, the landlord could face a liability suit.
- It’s not likely you’ll find a tenant who will properly perform preventative maintenance when it needs to be done or who will pay someone else to do it.
- Most renters like the fact that they are not responsible for repairs and maintenance—otherwise, they’d be homeowners.
- Putting such an important aspect of property ownership under the control of one’s tenants is just too big of a risk to take.
Ken might want to think about raising his rental rates to a level that will cover the expense of hiring a maintenance professional.
When a rental property starts deteriorating, it’s usually worth the effort and expense to fix it up. You’ll not only have a property you can be proud of, you’ll also attract tenants who care about their living quarters and will help you keep it in good shape. With a strong rental market, more landlords can afford to make improvements and upgrade their rental properties—and their tenants!
Posted by Teresa on May 6, 2011 under Landlord and Tenant FAQs |
What is a landlord’s responsibility after a tenant notifies that he or she is breaking a lease early? Can landlords just allow a rental unit to sit empty, requiring the old tenant to continue paying rent until the end of the original lease?
In a word, no. When a tenant breaches the terms of a lease, landlords are required to mitigate their losses by making a real attempt to fill the empty unit. Otherwise, apartments and rental houses everywhere would be sitting empty while tenants who need to move are paying rent at both their new and old places. Meanwhile, tenants who need homes to rent would be kept out of rentable units.
But how much effort is required of a landlord? If he or she makes an attempt to fill a rental unit, does that suffice? How far must a landlord go before requiring the former tenant to make up the loss in rent?
Here are two scenarios to illustrate typical landlord actions:
- Landlord A advertises a rental unit at above-market rates. In this case, it’s not the tenant’s fault when the listing doesn’t attract any new applicants. The landlord is increasing her chances of loss of rent by advertising the unit at above-market rents. It wouldn’t be fair to require the tenant to keep paying rent until someone willing to pay too much comes along.
- Landlord B advertises the rental unit at the same rent the tenant was paying and posts “For Rent” signs on the building. This landlord is showing a real effort to mitigate his losses. If no suitable tenants come forth, it is not the landlord’s fault, and therefore the tenant would likely be required to continue paying rent until the unit is leased.
Keeping rental units full at rates the market can bear is good for landlords ad tenants. So, when a tenant notifies you that they’re moving out ahead of the lease termination date, make every effort to fill that vacancy, and you’ll make three people happy—the old tenant, the new tenant and yourself!
Learn more about protecting your rental property and assets through tenant background checks. Proper tenant screening will ensure you are leasing to the best possible tenants.
Posted by Teresa on April 1, 2011 under Landlord and Tenant FAQs |
Question: A landlord accepts applications from three potential roommates for a three-bedroom rental unit. The first two check out fine. The third proves to be difficult and unpleasant, even borderline verbally abusive, in all her interactions with the landlord. He decides to not even order a tenant credit report and rejects all three applicants. Is the landlord allowed to refuse a tenant for reasons other than a credit score?
Answer: Of course. A landlord may decline an applicant for any reason other than those covered under the Fair Housing Act, which bars discrimination based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians), pregnant women, elderly people, people securing custody of children and handicap (disability).
A landlord does not have to disclose reasons for rejecting a tenant—you can simply say a more qualified applicant was approved. (Under the Fair Credit Reporting Act or FCRA, a letter must be sent to an applicant if credit is declined, including for rental housing)
Question: A landlord advertises a rental property using the following language:
For Rent. 3BR apartment, 3rd floor. Not suitable for kids or elderly.
Is this discriminatory?
Answer: Yes. See above: landlords may not deny housing based on family status or age. This landlord could get in big trouble for this type of ad.
Question: A landlord starts eviction proceedings after discovering a tenant has kept a cat in her apartment—contrary to the lease, which states no animals are allowed. The tenant tells the landlord that she needs the cat because it is a therapy animal. Is the landlord discriminating against the tenant based on a disability?
Answer: It often depends on where the rental property is located. In most areas, a tenant must provide proof that the therapy or companion animal is necessary for the individual’s mental health or stability. This is usually a statement by a medical provider. The Americans with Disabilities Act (ADA) does not include companion, emotional support or therapy animals, because they have not been trained to perform tasks that benefit a disabled person.
Posted by Teresa on March 17, 2011 under Landlord and Tenant FAQs |
Most landlords and property managers know that whether or not pets are allowed in their rental properties, exceptions must be made to accommodate companion and service animals for the disabled, under the Americans with Disabilities Act (ADA). But what functions as a service animal for a tenant might not look like a service animal to you.
A landlord might wonder how a bird or a snake could be used as a service animal. After all, it’s not as though they help the tenant cross the street.
Rental property owners and managers must remember that not all disabilities can be seen. For example, people who suffer seizures sometimes use boa constrictors to warn them of a coming seizure. The snakes gently squeeze their owners when they feel a seizure coming on, so the person can take medication or remove him or herself from a stressful setting.
Cats and ferrets are sometimes used by individuals who experience anxiety. The animals might serve to calm them down when during air or water travel. And a parakeet can help a person with severe depression by acting as the focus of the person’s care and attention. In this way, the bird improves the person’s daily functioning—which is the definition of a companion animal.
The ADA rule covering companion animals requires tenants to obtain certification by a medical professional that the animal is necessary to relieve the disability. If a tenant has such an order, then the rental property owner or manager must make reasonable accommodations for the animal. And remember, service animals are not pets.
The U.S. Department of Justice is currently trying to define service animals. Last year, it received thousands of comments when it announced plans to exclude from the definition wild animals and service animals whose sole function is to provide emotional support, comfort, therapy, and companionship, and to promote emotional well-being. We will keep you posted on what the DOJ decides!
Pre-screen all tenants as part of your standard application process. Background and credit checks will help ensure you rent to qualified tenants. For more landlord resources, including forms and information on tenant screening, turn to E-Renter.com.
